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It's not just crypto. The entire fintech space has an ideology that lines up far better with Silicon Valley than with Wall Street. The Wall Street mentality wou

It's not just crypto. The entire fintech space has an ideology that lines up far better with Silicon Valley than with Wall Street. The Wall Street mentality would dictate a very different course of action than the Silicon Valley mentality in many of the situations described in the cases brought by the DoJ and the SEC, and yet the Silicon Valley mentality seems to have been the guideline used by SBF/FTX -- perhaps because of a lack of experience dealing with customer funds, or perhaps due to ignorance of the seriousness of consequences. Edge cases matter a lot more to Wall Street than to Silicon Valley. Wall Street is a world where the new hire on the desk gets a talking-to by the managing director for making an error that could have led to a big loss, and where people are regularly reminded not to put anything in writing that they wouldn't want to see on the cover of the New York Times. Silicon Valley is a world where "move fast and break things" is a central mantra, and sometimes those things that get broken are the rules.

jeroenhd 4y ago
This is why I'm very wary watching foreign developments in the payment space. Living in a country where contscyless payments and free instant transactions were a thing long before Apple and Google arrived with their products, these services seem to add very little except for a foreign third party. Sure, PayPal was around in case you needed to buy something online in another country, but I don't believe it's as deeply ingrained. At the same time I read stories about other countries where people think it's completely normal that some third party app has replaced the bank's role as a payment processor, even going so far as to include these services within the banking environment itself. The way I see a large amount of fintech is that business savy people see their banks struggle to get up to standards that were common elsewhere ten years ago and try to make a quick buck throwing together an implementation before the banks can get themselves together. These companies solves the needs of the end customer, but only patch over the underlying problems that keep building up because there is no reason to address them anymore. How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce?
- lmm 4y ago
  > How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce? Meh. Being a middleman, or doing something better than companies do themselves, is the foundation of most economic value creation.
  - paganel 4y ago
    > of most economic value creation. As Schumpeter observed, value creation is accompanied by creative destruction, and right now it looks like we're in the "creative destruction" phase when it comes to fintech. It was one thing when in the early 2000s creative destruction was involving entities like pets.com, no-one was really hurt by those companies going down, but it's another thing when the company going down might hold your "savings" or owe you money as a SME, like Revolut or Klarna.
andrewstuart 4y ago
A license should be required to prove you understand your ethical obligations to handle anyone else's money. It's sad that the entire crypto industry happened too fast for the regulations to keep up, with the unsurprising result that vast amounts of customer money have been lost and stolen - the precise reason for regulation. I would not be surprised if many people have taken their own lives as a result of crypto losses arising directly from lack of integrity of the companies managing the customer money.
- totalZero 4y ago
  I totally agree. Licenses/certifications do exist. SBF had the FINRA Series 7 and 55. https://brokercheck.finra.org/individual/summary/6204362 https://brokercheck.finra.org/individual/summary/6204362 The loophole is that employees at hedge funds and investment advisers don't face the same licensing requirements as employees at banks and brokerages who deal directly with customers. There are people who trade billions of dollars of customer funds a week without any required regulatory exam or license.
  - Animats 4y ago
    He had a series 7? Did not know that. But, right, he was a trader with Jane Street, so he had to have a Series 55 and probably the Series 7, which is for brokers. (Everybody in finance takes the SIE, the "securities industry essentials" exam. That should be required for programmers in finance.) So he knew what he was supposed to be doing.
    - mlrtime 4y ago
      There are a few trading firms that require all SWE/Traders/Quants to get the Series 7. I have a Series 7 and have never handled client money, but I wrote software and had had access to these systems. Not all fintechs are evil.
- fallingknife 4y ago
  No one is breaking the rules because they don't know them and nobody knows the rules better than those breaking them.
skybrian 4y ago
I've never been near code handling money, but "never put anything in writing that you wouldn't want to see in the New York Times" is something I've heard repeatedly at a big tech company too. It seems like pretty standard advice nowadays. The "move fast and break things" slogan was by Zuckerberg at Facebook, though they've since abandoned it.
- 908087 4y ago
mavelikara 4y ago
> Silicon Valley is a world where "move fast and break things" is a central mantra, and sometimes those things that get broken are the rules. And, Wall St is where this isn't the case?
- kaesar14 4y ago
  It’s crazy to think Wall Street has never once moved fast and broken things, like the global economy, for instance.
- vgatherps 4y ago
  I’ve worked at market making firms in US and there were exceptionally strict controls and regulations. Engineers had to be properly qualified to even touch certain parts of the codebase and it potentially came with legal ramifications.
tiahura 4y ago
an ideology that lines up far better with Silicon Valley than with Wall Street. An interesting observation. My take is that even though Wall Street has unfathomable levels of hubris and poor ethics, it understands CYA. Fintech on the other hand...

jeroenhd 4y ago

This is why I'm very wary watching foreign developments in the payment space. Living in a country where contscyless payments and free instant transactions were a thing long before Apple and Google arrived with their products, these services seem to add very little except for a foreign third party. Sure, PayPal was around in case you needed to buy something online in another country, but I don't believe it's as deeply ingrained. At the same time I read stories about other countries where people think it's completely normal that some third party app has replaced the bank's role as a payment processor, even going so far as to include these services within the banking environment itself. The way I see a large amount of fintech is that business savy people see their banks struggle to get up to standards that were common elsewhere ten years ago and try to make a quick buck throwing together an implementation before the banks can get themselves together. These companies solves the needs of the end customer, but only patch over the underlying problems that keep building up because there is no reason to address them anymore. How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce?

lmm 4y ago
> How much can you really trust a company built on profiting off the failings of a basic institution underlying almost all commerce? Meh. Being a middleman, or doing something better than companies do themselves, is the foundation of most economic value creation.
- paganel 4y ago
  > of most economic value creation. As Schumpeter observed, value creation is accompanied by creative destruction, and right now it looks like we're in the "creative destruction" phase when it comes to fintech. It was one thing when in the early 2000s creative destruction was involving entities like pets.com, no-one was really hurt by those companies going down, but it's another thing when the company going down might hold your "savings" or owe you money as a SME, like Revolut or Klarna.

andrewstuart 4y ago

A license should be required to prove you understand your ethical obligations to handle anyone else's money. It's sad that the entire crypto industry happened too fast for the regulations to keep up, with the unsurprising result that vast amounts of customer money have been lost and stolen - the precise reason for regulation. I would not be surprised if many people have taken their own lives as a result of crypto losses arising directly from lack of integrity of the companies managing the customer money.

totalZero 4y ago
I totally agree. Licenses/certifications do exist. SBF had the FINRA Series 7 and 55. https://brokercheck.finra.org/individual/summary/6204362 https://brokercheck.finra.org/individual/summary/6204362 The loophole is that employees at hedge funds and investment advisers don't face the same licensing requirements as employees at banks and brokerages who deal directly with customers. There are people who trade billions of dollars of customer funds a week without any required regulatory exam or license.
- Animats 4y ago
  He had a series 7? Did not know that. But, right, he was a trader with Jane Street, so he had to have a Series 55 and probably the Series 7, which is for brokers. (Everybody in finance takes the SIE, the "securities industry essentials" exam. That should be required for programmers in finance.) So he knew what he was supposed to be doing.
  - mlrtime 4y ago
    There are a few trading firms that require all SWE/Traders/Quants to get the Series 7. I have a Series 7 and have never handled client money, but I wrote software and had had access to these systems. Not all fintechs are evil.
fallingknife 4y ago
No one is breaking the rules because they don't know them and nobody knows the rules better than those breaking them.

skybrian 4y ago

I've never been near code handling money, but "never put anything in writing that you wouldn't want to see in the New York Times" is something I've heard repeatedly at a big tech company too. It seems like pretty standard advice nowadays. The "move fast and break things" slogan was by Zuckerberg at Facebook, though they've since abandoned it.

908087 4y ago

mavelikara 4y ago

> Silicon Valley is a world where "move fast and break things" is a central mantra, and sometimes those things that get broken are the rules. And, Wall St is where this isn't the case?

kaesar14 4y ago
It’s crazy to think Wall Street has never once moved fast and broken things, like the global economy, for instance.
vgatherps 4y ago
I’ve worked at market making firms in US and there were exceptionally strict controls and regulations. Engineers had to be properly qualified to even touch certain parts of the codebase and it potentially came with legal ramifications.

tiahura 4y ago

an ideology that lines up far better with Silicon Valley than with Wall Street. An interesting observation. My take is that even though Wall Street has unfathomable levels of hubris and poor ethics, it understands CYA. Fintech on the other hand...